One of the biggest decisions divorcing couples come across is what to do with their home. This can feel stressful and overwhelming. The best way to combat that is to be as knowledgeable as possible when confronting what to do with your home. Here is a rundown of what you can do with your home during this time. Contact us today to talk further about your options.
Stay or Sell?
The first consideration to make is whether someone will continue living in the home, or if it is best to sell the home. This can be a hard decision emotionally, but it is important to consider finances. If one spouse chooses to stay in the home, they need to assure they can comfortably afford any outstanding mortgage payments, upkeep of the home, and additional utilities. If the decision to sell the home is made, both partners should ensure they have a written and understood agreement of the distribution of equity.
To come to a comfortable and knowledgeable decision on the next move for your house, consider some of these options:
Refinancing The Mortgage
If one spouse decides to continue living in the home, it is possible to refinance a joint mortgage in their name. This way, the other partner will be released from the responsibility of the home. It is crucial to not only refinance, but ensure the title is updated to reflect only one owner! A common deed used to do this is a quitclaim deed.
Pay Off Ex for Their Share
Another applicable option is to pay off one partner for their share of the home. For example, if $100,000 is already paid towards the mortgage of the home, assuming a 50/50 equity split, one partner would pay $50,000 to gain the other’s share of the home. To get the cash for this, consider a refinance, HELOC, or home equity loan. To learn more about these options, contact a team member today!
Everyone’s Favorite Thing… Taxes
Whatever decision is made, tax implications will be important when making this decision. The most common implication is the capital gains tax. This is a tax on the sale of capital assets when the profit surpasses a specific amount. In this case, the asset would be the home. If you are in this position, head here to learn more about this tax.
All in all, deciding to sell or keep the home is a hard decision amongst many divorcing couples. Knowing the options available, and what to be aware of makes it a little easier. If you sell the home, and are looking to buy a new home, check out our Direct Mortgage Loans, all in one homebuying video guide!